Punjab & Haryana High Court (‘HC’) ruling wherein it was held that reflection of notice on Income Tax Department’s e-portal is not a valid mode of service.

Brief Background

• The taxpayer was issued show cause notice (SCN) for initiating proceedings under Section 12A(1)(ac)(iii) of the Income tax Act, 1961 (‘the Act’) which was only reflected on the e-portal and was not sent on the taxpayer’s email ID. Subsequently, two reminders for the aforesaid SCN were published only on the e-portal.
• The tax authorities were of the view that submitting communication of notice electronically would also include communication of notice by placing it on e-portal and no email communication was required in this regard.

Key excerpts from Ruling

• The HC rejected the contentions of the tax authorities and held that it is essential before any action is taken, a communication must be in terms of the provisions of the Act.
• HC observed that the provisions do not mention communication to be “presumed” by placing notice on the e-Portal.
• Remarks that an Individual or a Company is not expected to keep the e-portal of the department open all the time so as to have knowledge of what the tax authorities are supposed to be doing with regards to the submission;
• Taking into consideration that principles of natural justice are inherent in the income tax provisions, the HC concludes that the taxpayer has not been given sufficient opportunity to put up his pleas regarding the proceedings.
• And accordingly, quashes the order and directs tax authorities to pass order afresh after granting the opportunity of being heard.

This is an important ruling to substantiate cases where email/ physical post communication of service of notice from the tax authorities are not complied with. In this regard, we also recommend ensuring the email ID & phone numbers are correctly updated in the Income tax portal.